World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Monday, November 16, 2009

Former Washington State Governor and current Commerce Secretary, Gary Locke, steps into his new role by chanting the usual “concern” over the weak dollar. Then he immediately turns around and talks about how important it is to increase our exports (meaning we’re going to keep the value of the dollar low to stimulate overseas demand).

This is simply fallacious thinking, kind of like the old “trickle down” theory… First of all, we import substantially more than we export. That means that when you force the dollar down, you force the PRICE of imports up, making the debt saturated and overtaxed consumers in America pay more for their imports. Thus, they have less money available to spend elsewhere in the economy, its effects being more like an additional tax. Meanwhile, the corporations who do export may benefit from it somewhat, but ONLY if their export business exceeds their domestic business. Yet another false MYTH perpetuated by the special interests of a few corporations.

Note that he was in China just 10 days ago, just a week ahead of Obama. I like Locke, but I’m not sure he fully understands the economic situation in which he is standing. In fact, I’m pretty sure he doesn’t.